Gold will top $2000’
If you remember, at the beginning of the year, there was a veritable chorus about how global gold prices, after 12 straight years of gains, would soar again in 2012.
Top global names in banking and broking, including UBS, HSBC, Barclays, BNP Paribas and Merrill Lynch, were in unusual agreement that gold prices would top $2,000 an ounce in 2012.
That didn’t happen. Instead, gold spent most of the year trying, without success, to break past $1,800 levels. Global gold prices finally languished at about $1,660 by year-end having notched up just a 6 per cent gain for 2012.
The problem with forecasting gold prices, or indeed the prices of any commodity, is that there is no fundamental value (based on cash flows or earnings) that can be assigned to a gold bar or a sack of grain.
Unlike equities or even currencies, where there is such a thing as intrinsic value that tethers the market price, commodities have no valuation metrics.
What adds another nice twist to commodity price forecasts is the China factor.
Given that China plays a big role in deciding the demand picture for a range of commodities, how a commodity behaves through the year often depends on how the Chinese economy is faring at the moment. That is a wild card that even best of forecasters have not managed to master.
‘GDP growth at over 7 per cent, inflation below it’
If demand for them exceeds supply, desperate buyers may be willing to buy at any price. And if supplies overwhelm, their prices can tumble like ninepins.
This was despite a supportive market, where global central banks obliged with a QE3 which was much grander and larger in scale than any previous liquidity-infusing exercise.
So Finally your money, you check before you play with it. All Tech analyst are not rich.
